On Friday, the S&P 500 (SP500). decreased by 0.51% at the end of the week it stood at 5,277.51 points, recording losses in two of the four sessions in the week shortened by the Memorial Day holiday. Its companion SPDR S&P 500 ETF Trust (NYSEARCA:SPY) lost 0.39%.
The benchmark index posted its first weekly decline in the holiday-shortened week after a five-week winning streak.
The S&P (SP500) has surpassed the record closing high of 5,321.49 it hit last week. Investors are assessing the sinking outlook ahead of a enormous round of Federal Reserve rate cuts in 2024, as well as some gains in an overall solid first-quarter earnings season. Shares of Salesforce (CRM) fell this week after the enterprise software giant’s first-quarter report and guidance fell miniature of Wall Street expectations, and Dell (Dell) fell after the release of cushioned margin guidance.
On Friday, markets received the April PCE inflation report, with the Fed’s official target – the 12-month core PCE rate – remaining at 2.8% since March. Inflation data was in line with consensus, but the spending in the report was slightly lower than expected, Chris Zaccarelli, chief investment officer at Independent Advisor Alliance, said in a note.
“We are at a moment where be careful what you wish for, because if the slowdown in consumer spending leads to lower inflation and the Fed can slowly make cuts as a result, that will be good for markets,” Zaccarelli said. But “if consumer spending – and the economy – slows too quickly, corporate profits and stock prices will fall much faster than the Fed can lower interest rates, so we would be cautious at this point,” he said.
Friday’s afternoon rally in stock prices caused the S&P 500 Index (SP500) and the Dow Large Cap Index (DJI) to end the day in positive territory. The tech-focused Nasdaq Composite (COMP:IND) fell but closed at a low.
While the major indexes fell this week, they rose to record highs in May. The S&P 500 (SP500) rose 4.80%, its strongest month since February. The Nasdaq Composite Index (COMP:IND) rose 6.88%, the sharpest gain since November 2023. The Dow industrials (DJI) rose 2.30%, the best gain since December 2023. The blue chip average exceeded this month the level is 40,000.
Shares of AI chipmaker Nvidia (NVDA) rose 26.89% in May, a record high for the month. Investors welcomed the company’s first-quarter results, future outlook and 10-to-1 stock split plan that will take effect in June.
“NVDA has had a perhaps unprecedented streak of beating the market consensus on revenue and earnings by raising its guidance, then beating the raised guidance and raising it again,” Steve Sosnick, chief strategist at Interactive Brokers, said this week.
June trading will start next week. Investors will be looking forward to the May US jobs report and the expected interest rate cut by the European Central Bank, which will begin a cycle of interest rate cuts. Nvidia’s (NVDA) 10-to-1 stock split will go into effect tardy Friday, and shares will begin trading on Monday, June 10, post-split.
Turning to the weekly S&P 500 (SP500) sector performance, six of the 11 sectors advanced. Energy and real estate were the top winners, each up about 2%. Healthcare, industry and technology collapsed. Below is a breakdown of the performance of the sectors and their companion SPDR Select Sector ETFs from May 24 through the close of business on May 31:
- #1: Energy +2.01%and Energy Select Sector SPDR Fund ETF (XLE) +2.00%.
- #2: Real Estate +1.80%, and Real Estate Select Sector SPDR Fund ETF (XLRE) +1.87%.
- #3: Tools +1.62%and Utilities Select Sector SPDR Fund ETF (XLU) +1.71%.
- #4: Consumer essentials +0.09%and Consumer Staples Select Sector SPDR Fund ETF (XLP) +0.31%.
- #5: Materials +0.08%and Materials Select Sector SPDR Fund ETF (XLB) +00.19%.
- #6: Finances +0.05%and the Financial Select Sector SPDR Fund ETF (XLF) +0.07%.
- #7: Consumer Discretionary -0.31%and Consumer Discretionary Select Sector SPDR ETF (XLY), -0.42%.
- #8: Healthcare -0.58%and Health Care Select Sector SPDR Fund ETF (XLV) -0.49%.
- #9: Communication services -0.60%and the Communication Services Select Sector SPDR Fund (XLC) +0.37%.
- #10: Industry -0.84%and the Industrial Select Sector SPDR Fund ETF (XLI) -0.76%.
- #11: Information technology -1.46%and Technology Select Sector SPDR Fund ETF (XLK) -2.33%.
Investors looking ahead to events should keep an eye on the Seeking Alpha Catalyst Watch for a breakdown of next week’s standout events.
